81R30885 SMH/JJT-D
 
  By: Coleman, Oliveira, Madden H.B. No. 3484
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to certain acts and proceedings of certain local
  governments, including those related to tax increment financing,
  and the validity of certain acts and proceedings.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
  ARTICLE 1.  VALIDITY OF CERTAIN ACTS OR PROCEEDINGS OF MUNICIPAL
  MANAGEMENT DISTRICTS
         SECTION 1.01.  Subchapter A, Chapter 375, Local Government
  Code, is amended by adding Section 375.005 to read as follows:
         Sec. 375.005.  PRESUMPTION OF VALIDITY OF ACT OR PROCEEDING.
  (a) This section applies to:
               (1)  a district created under this chapter; and
               (2)  a district created under a local law that in
  accordance with that local law operates wholly or partly under this
  chapter.
         (b)  On and after the second anniversary of the effective
  date of a governmental act or proceeding of a district, including a
  governmental act or proceeding related to the district's creation,
  boundaries, operation, administration, annexation or exclusion of
  land or other property, levy or collection of ad valorem taxes, or
  adoption or implementation of a service and improvement plan and
  the determination, levy, and collection of assessments pursuant to
  the plan, the governmental act or proceeding is conclusively
  presumed, as of the date it occurred, to be valid and to have
  occurred in accordance with law.
         (c)  The presumption provided by Subsection (b) does not
  apply to a governmental act or proceeding of a district regarding
  which a lawsuit to annul or invalidate the act or proceeding is
  filed on or before the second anniversary of the effective date of
  the governmental act or proceeding.
         (d)  The presumption provided by Subsection (b) does not
  apply to:
               (1)  a governmental act or proceeding of a district
  that at the time the act or proceeding occurred was a misdemeanor or
  felony under a statute of this state or the United States; or
               (2)  a district rule that, at the time it was passed,
  was preempted by a statute of this state or the United States,
  including Section 1.06 or 109.57, Alcoholic Beverage Code.
         SECTION 1.02.  The presumption provided by Section
  375.005(b), Local Government Code, as added by this Act, does not
  apply to:
               (1)  a governmental act or proceeding of a district
  regarding which a lawsuit to annul or invalidate the act or
  proceeding is filed on or before August 31, 2009; or
               (2)  a matter that on September 1, 2009:
                     (A)  is involved in litigation, if the litigation
  ultimately results in the matter being held invalid by a final
  judgment of a court; or
                     (B)  has been held invalid by a final judgment of a
  court.
         SECTION 1.03.  (a) The legislature validates and confirms,
  as of the dates on which they occurred, all governmental acts or
  proceedings of a district created under Chapter 375, Local
  Government Code, or a district that is created by a local law and
  that operates wholly or partly under Chapter 375, Local Government
  Code, including governmental acts and proceedings related to the
  district's creation, boundaries, operation, administration,
  annexation or exclusion of land or other property, levy or
  collection of ad valorem taxes, or adoption or implementation of a
  service and improvement plan and the determination, levy, and
  collection of assessments pursuant to the plan, that were taken
  before the effective date of this Act.
         (b)  Subsection (a) of this section does not apply to a
  matter that on the 30th day after the effective date of this Act:
               (1)  is involved in litigation, if the litigation
  ultimately results in the matter being held invalid by a final
  judgment of a court; or
               (2)  has been held invalid by a final judgment of a
  court.
  ARTICLE 2.  TAX INCREMENT FINANCING
         SECTION 2.01.  Section 311.002(1), Tax Code, is amended to
  read as follows:
               (1)  "Project costs" means the expenditures made or
  estimated to be made and monetary obligations incurred or estimated
  to be incurred by the municipality or county designating 
  [establishing] a reinvestment zone that are listed in the project
  plan as costs of public works, [or] public improvements, programs,
  or other projects benefiting [in] the zone, plus other costs
  incidental to those expenditures and obligations.  "Project costs"
  include:
                     (A)  capital costs, including the actual costs of
  the acquisition and construction of public works, public
  improvements, new buildings, structures, and fixtures; the actual
  costs of the acquisition, demolition, alteration, remodeling,
  repair, or reconstruction of existing buildings, structures, and
  fixtures; the actual costs of the remediation of conditions that
  contaminate public or private land or buildings; the actual costs
  of the preservation of the facade of a public or private building;
  the actual costs of the demolition of public or private buildings;
  and the actual costs of the acquisition of land and equipment and
  the clearing and grading of land;
                     (B)  financing costs, including all interest paid
  to holders of evidences of indebtedness or other obligations issued
  to pay for project costs and any premium paid over the principal
  amount of the obligations because of the redemption of the
  obligations before maturity;
                     (C)  real property assembly costs;
                     (D)  professional service costs, including those
  incurred for architectural, planning, engineering, and legal
  advice and services;
                     (E)  imputed administrative costs, including
  reasonable charges for the time spent by employees of the
  municipality or county in connection with the implementation of a
  project plan;
                     (F)  relocation costs;
                     (G)  organizational costs, including the costs of
  conducting environmental impact studies or other studies, the cost
  of publicizing the creation of the zone, and the cost of
  implementing the project plan for the zone;
                     (H)  interest before and during construction and
  for one year after completion of construction, whether or not
  capitalized;
                     (I)  the cost of operating the reinvestment zone
  and project facilities;
                     (J)  the amount of any contributions made by the
  municipality or county from general revenue for the implementation
  of the project plan; [and]
                     (K)  the costs of a program described by Section
  311.010(h);
                     (L)  the costs of school buildings, other
  educational buildings, other educational facilities, or other
  buildings owned by or on behalf of a school district, community
  college district, or other political subdivision of this state;
                     (M)  the costs of providing affordable housing or
  areas of public assembly in or outside of the zone; and
                     (N)  payments made at the discretion of the
  governing body of the municipality or county that the governing
  body finds necessary or convenient to the creation of the zone or to
  the implementation of the project plans for the zone.
         SECTION 2.02.  Sections 311.003(a) and (b), Tax Code, are
  amended to read as follows:
         (a)  The governing body of a county by order may designate a
  geographic area in the county or the governing body of a
  municipality by ordinance [or the governing body of a county by
  order] may designate a [contiguous] geographic area that is in the
  corporate limits of the municipality, in the extraterritorial
  jurisdiction of the municipality, or in both [in the jurisdiction
  of the municipality or county] to be a reinvestment zone to promote
  development or redevelopment of the area if the governing body
  determines that development or redevelopment would not occur solely
  through private investment in the reasonably foreseeable future.
  The area need not be contiguous if the governing body determines
  that the tracts included in the area are substantially related. The
  designation of an area that is wholly or partly located in the
  extraterritorial jurisdiction of a municipality is not affected by
  a subsequent annexation of real property in the reinvestment zone
  by the municipality. The tax increment base of a municipality that
  annexes an area in a zone after the area is included in the zone is
  computed as if the area were located in the corporate limits of the
  municipality at the time the area was included in the zone.
         (b)  Before adopting an ordinance or order designating 
  [providing for] a reinvestment zone, the governing body of the
  municipality or county must prepare a preliminary reinvestment zone
  financing plan.  [As soon as the plan is completed, a copy of the
  plan must be sent to the governing body of each taxing unit that
  levies taxes on real property in the proposed zone.]
         SECTION 2.03.  Chapter 311, Tax Code, is amended by adding
  Section 311.0035 to read as follows:
         Sec. 311.0035.  PROCEDURE FOR DESIGNATING JOINT
  REINVESTMENT ZONE. (a)  The governing bodies of two or more
  municipalities by ordinance adopted by each municipality may
  designate a contiguous area in the jurisdiction of each of the
  municipalities to be a joint reinvestment zone. Except as
  otherwise provided by this section, each of the municipalities must
  follow the procedures provided by Section 311.003 to designate an
  area as a joint reinvestment zone. The ordinances adopted by all of
  the municipalities designating an area as a joint reinvestment zone
  must contain the same terms and must:
               (1)  describe the boundaries of the zone with
  sufficient definiteness to identify with ordinary and reasonable
  certainty the territory included in the zone;
               (2)  create a board of directors for the zone and
  specify:
                     (A)  the number of directors;
                     (B)  the qualifications of directors;
                     (C)  the manner in which directors are appointed;
                     (D)  the terms of directors;
                     (E)  the manner in which vacancies on the board
  are filled; and
                     (F)  the manner by which officers of the board are
  selected;
               (3)  provide that the zone takes effect immediately on
  adoption of the ordinance by the last of the municipalities in the
  jurisdiction of which the area contained in the zone is located;
               (4)  provide a termination date for the zone;
               (5)  assign a name to the zone, which may include the
  name of one or more of the designating municipalities and may
  contain a number;
               (6)  establish a tax increment fund for the zone; and
               (7)  contain findings that:
                     (A)  improvements in the zone will significantly
  enhance the value of all taxable real property in the zone and will
  be of general benefit to the municipalities; and
                     (B)  the area meets the requirements of Sections
  311.005(a)(1) and (2) and (a-1).
         (b)  For purposes of complying with Subsection (a)(7)(A),
  the ordinances are not required to identify the specific parcels of
  real property to be enhanced in value.
         (c)  The boundaries of a joint reinvestment zone may be
  enlarged or reduced by ordinance of the governing bodies of the
  municipalities that designated the zone, subject to the
  restrictions contained in this section.
         (d)  The municipalities designating a joint reinvestment
  zone may exercise any power necessary and convenient to carry out
  this section and the other provisions of this chapter, including
  the powers listed in Section 311.008.
         (e)  Except as otherwise provided by this section, the board
  of directors of a joint reinvestment zone has the same powers and
  duties and is subject to the same limitations as the board of
  directors of a reinvestment zone designated by a single
  municipality. Sections 311.011, 311.012, 311.0123, 311.013,
  311.014, 311.015, 311.016, 311.0163, and 311.018 apply to the
  municipalities designating a joint reinvestment zone, except that a
  reference in those sections to a municipality means all of the
  municipalities designating a joint reinvestment zone and an action
  required of a municipality under those sections is considered to be
  required of all of the municipalities designating a joint
  reinvestment zone.
         (f)  Expenditures from tax increment financing funds or
  bonds secured by tax increment financing may be made without regard
  to the location from which the funds were derived or the location
  within the joint reinvestment zone at which the funds are spent, but
  only if those expenditures are authorized as required by this
  chapter.
         SECTION 2.04.  Section 311.005(a), Tax Code, is amended to
  read as follows:
         (a)  To be designated as a reinvestment zone, an area must:
               (1)  substantially arrest or impair the sound growth of
  the municipality or county designating [creating] the zone, retard
  the provision of housing accommodations, or constitute an economic
  or social liability and be a menace to the public health, safety,
  morals, or welfare in its present condition and use because of the
  presence of:
                     (A)  a substantial number of substandard, slum,
  deteriorated, or deteriorating structures;
                     (B)  the predominance of defective or inadequate
  sidewalk or street layout;
                     (C)  faulty lot layout in relation to size,
  adequacy, accessibility, or usefulness;
                     (D)  unsanitary or unsafe conditions;
                     (E)  the deterioration of site or other
  improvements;
                     (F)  tax or special assessment delinquency
  exceeding the fair value of the land;
                     (G)  defective or unusual conditions of title;
                     (H)  conditions that endanger life or property by
  fire or other cause; or
                     (I)  structures, other than single-family
  residential structures, less than 10 percent of the square footage
  of which has been used for commercial, industrial, or residential
  purposes during the preceding 12 years, if the municipality has a
  population of 100,000 or more;
               (2)  be predominantly open, undeveloped, or
  underdeveloped and, because of obsolete platting, deterioration of
  structures or site improvements, or other factors, substantially
  impair or arrest the sound growth of the municipality or county;
               (3)  be in a federally assisted new community located
  in the municipality or county or in an area immediately adjacent to
  a federally assisted new community; or
               (4)  be an area described in a petition requesting that
  the area be designated as a reinvestment zone, if the petition is
  submitted to the governing body of the municipality or county by the
  owners of property constituting at least 50 percent of the
  appraised value of the property in the area according to the most
  recent certified appraisal roll for the county in which the area is
  located.
         SECTION 2.05.  Section 311.007, Tax Code, is amended to read
  as follows:
         Sec. 311.007.  CHANGING BOUNDARIES OR TERM OF EXISTING ZONE.  
  (a)  The [Subject to the limitations provided by Section 311.006, if
  applicable, the] boundaries of an existing reinvestment zone may be
  reduced or enlarged by ordinance or resolution of the governing
  body of the municipality or by order or resolution of the governing
  body of the county that designated [created] the zone.
         (b)  The governing body of the municipality or county that
  designated a reinvestment zone by ordinance or resolution or by
  order or resolution, respectively, may extend the term of all or a
  portion of the zone after notice and hearing in the manner provided
  for the designation of the zone. A taxing unit other than the
  municipality or county that designated the zone is not required to
  participate in the zone or portion of the zone for the extended term
  unless the taxing unit enters into a written agreement to do so [may
  enlarge an existing reinvestment zone to include an area described
  in a petition requesting that the area be included in the zone if
  the petition is submitted to the governing body of the municipality
  or county by the owners of property constituting at least 50 percent
  of the appraised value of the property in the area according to the
  most recent certified appraisal roll for the county in which the
  area is located.   The composition of the board of directors of the
  zone continues to be governed by Section 311.009(a) or (b),
  whichever applied to the zone immediately before the enlargement of
  the zone, except that the membership of the board must conform to
  the requirements of the applicable subsection of Section 311.009 as
  applied to the zone after its enlargement.   The provision of Section
  311.006(b) relating to the amount of property used for residential
  purposes that may be included in the zone does not apply to the
  enlargement of a zone under this subsection].
         SECTION 2.06.  Section 311.008, Tax Code, is amended by
  amending Subsection (b) and adding Subsections (f) and (g) to read
  as follows:
         (b)  A municipality or county may exercise any power
  necessary and convenient to carry out this chapter, including the
  power to:
               (1)  cause project plans to be prepared, approve and
  implement the plans, and otherwise achieve the purposes of the
  plan;
               (2)  acquire real property by purchase, condemnation,
  or other means [to implement project plans] and sell real [that]
  property, on the terms and conditions and in the manner it considers
  advisable, to implement project plans;
               (3)  enter into agreements, including agreements with
  bondholders, determined by the governing body of the municipality
  or county to be necessary or convenient to implement project plans
  and achieve their purposes, which agreements may include
  conditions, restrictions, or covenants that run with the land or
  that by other means regulate or restrict the use of land; and
               (4)  consistent with the project plan for the zone:
                     (A)  acquire blighted, deteriorated,
  deteriorating, undeveloped, or inappropriately developed real
  property or other property in a blighted area or in a federally
  assisted new community in the zone for the preservation or
  restoration of historic sites, beautification or conservation, the
  provision of public works or public facilities, or other public
  purposes;
                     (B)  acquire, construct, reconstruct, or install
  public works, facilities, or sites or other public improvements,
  including utilities, streets, street lights, water and sewer
  facilities, pedestrian malls and walkways, parks, flood and
  drainage facilities, or parking facilities, but not including
  educational facilities; or
                     (C)  in a reinvestment zone designated [created]
  on or before September 1, 1999, acquire, construct, or reconstruct
  educational facilities in the municipality.
         (f)  The governing body of a municipality or county may
  impose a fee:
               (1)  on property owners who submit a petition under
  Section 311.005(a)(4) for processing the petition; or
               (2)  for reviewing a project designated or proposed to
  be designated under this chapter.
         (g)  A fee under Subsection (f) must be reasonably related to
  the estimated cost to the municipality or county of processing the
  petition or reviewing the project, respectively.
         SECTION 2.07.  Section 311.0085(a), Tax Code, is amended to
  read as follows:
         (a)  This section applies only to a municipality with a
  population of less than 130,000 as shown by the 2000 federal
  decennial census that has[:
               [(1)]  territory in three counties[; and
               [(2)  a population of less than 120,000].
         SECTION 2.08.  Sections 311.009(a), (b), and (e), Tax Code,
  are amended to read as follows:
         (a)  Except as provided by Subsection (b), the board of
  directors of a reinvestment zone consists of at least five and not
  more than 15 members, unless more than 15 members are required to
  satisfy the requirements of this subsection. Each taxing unit
  other than the municipality or county that designated [created] the
  zone that levies taxes on real property in the zone may appoint one
  member of the board if the taxing unit has approved the payment of
  all or part of the tax increment produced by the unit into the tax
  increment fund for the zone. A unit may waive its right to appoint a
  director. The governing body of the municipality or county that
  designated [created] the zone may appoint not more than 10
  directors to the board; except that if there are fewer than five
  directors appointed by taxing units other than the municipality or
  county, the governing body of the municipality or county may
  appoint more than 10 members as long as the total membership of the
  board does not exceed 15.
         (b)  If the zone was designated under Section 311.005(a)(4),
  the governing body of the municipality or county that designated
  the zone may provide that the board of directors of the zone
  consists of nine members appointed as provided by this subsection,
  unless more than nine members are required to comply with this
  subsection.  Each taxing unit [school district, county, or
  municipality], other than the municipality or county that
  designated [created] the zone, that levies taxes on real property
  in the zone may appoint one member of the board if the taxing unit
  [school district, county, or municipality] has approved the payment
  of all or part of the tax increment produced by the unit into the tax
  increment fund for the zone.  The member of the state senate in
  whose district the zone is located is a member of the board, and the
  member of the state house of representatives in whose district the
  zone is located is a member of the board, except that either may
  designate another individual to serve in the member's place at the
  pleasure of the member.  If the zone is located in more than one
  senate or house district, this subsection applies only to the
  senator or representative in whose district a larger portion of the
  zone is located than any other senate or house district, as
  applicable.  If fewer than seven taxing units, other than the
  municipality or county that designated the zone, are eligible to
  appoint members of the board of directors of the zone, the
  municipality or county may appoint a number of members of the board
  such that the board comprises nine members. If at least seven
  taxing units, other than the municipality or county that designated
  the zone, are eligible to appoint members of the board of directors
  of the zone, the municipality or county may appoint one member.
  [The remaining members of the board are appointed by the governing
  body of the municipality or county that created the zone.]
         (e)  To be eligible for appointment to the board by the
  governing body of the municipality or county that designated 
  [created] the zone, an individual must:
               (1)  if the board is covered by Subsection (a):
                     (A)  be a resident of this state and a citizen of
  the United States [qualified voter of the municipality or county,
  as applicable]; and [or]
                     (B)  be at least 18 years of age [and own real
  property in the zone, whether or not the individual resides in the
  municipality or county]; or
               (2)  if the board is covered by Subsection (b):
                     (A)  be at least 18 years of age; and
                     (B)  own real property in the zone or be an
  employee, tenant, or agent of a person that owns real property in
  the zone.
         SECTION 2.09.  Section 311.0091, Tax Code, is amended by
  amending Subsection (f) and adding Subsection (i) to read as
  follows:
         (f)  Except as provided by Subsection (i), to [To] be
  eligible for appointment to the board, an individual must:
               (1)  be a qualified voter of the municipality; or
               (2)  be at least 18 years of age and own real property
  in the zone or be an employee or agent of a person that owns real
  property in the zone.
         (i)  The eligibility criteria for appointment to the board
  specified by Subsection (f) do not apply to an individual appointed
  by a conservation and reclamation district:
               (1)  created under Section 59, Article XVI, Texas
  Constitution; and
               (2)  the jurisdiction of which covers four counties.
         SECTION 2.10.  Sections 311.010(b), (g), and (h), Tax Code,
  are amended to read as follows:
         (b)  The board of directors of a reinvestment zone and the
  governing body of the municipality or county that designates 
  [creates] a reinvestment zone may each enter into agreements as the
  board or the governing body considers necessary or convenient to
  implement the project plan and reinvestment zone financing plan and
  achieve their purposes.  An agreement may provide for the
  regulation or restriction of the use of land by imposing
  conditions, restrictions, or covenants that run with the land.  An
  agreement may during the term of the agreement dedicate, pledge, or
  otherwise provide for the use of revenue in the tax increment fund
  to pay any project costs that benefit the reinvestment zone,
  including project costs relating to the cost of buildings, schools,
  or other educational facilities owned by or on behalf of a school
  district, community college district, or other political
  subdivision of this state, railroad or transit facilities,
  affordable housing, the remediation of conditions that contaminate
  public or private land or buildings, the preservation of the facade
  of a private or public building, [or] the demolition of public or
  private buildings, or the construction of a road, sidewalk, or
  other public infrastructure in or out of the zone, including the
  cost of acquiring the real property necessary for the construction
  of the road, sidewalk, or other public infrastructure.  An
  agreement may dedicate revenue from the tax increment fund to pay
  the costs of providing affordable housing or areas of public
  assembly in or out of the zone.  [An agreement may dedicate revenue
  from the tax increment fund to pay a neighborhood enterprise
  association for providing services or carrying out projects
  authorized under Subchapters E and G, Chapter 2303, Government
  Code, in the zone.   The term of an agreement with a neighborhood
  enterprise association may not exceed 10 years.]
         (g)  Chapter 252, Local Government Code, does not apply to a
  dedication, pledge, or other use of revenue in the tax increment
  fund for a reinvestment zone [by the board of directors of the zone
  in carrying out its powers] under Subsection (b).
         (h)  Subject to the approval of the governing body of the
  municipality or county that designated [created] the zone, the
  board of directors of a reinvestment zone, as necessary or
  convenient to implement the project plan and reinvestment zone
  financing plan and achieve their purposes, may establish and
  provide for the administration of one or more programs for the
  public purposes of developing and diversifying the economy of the
  zone, eliminating unemployment and underemployment in the zone, and
  developing or expanding transportation, business, and commercial
  activity in the zone, including programs to make grants and loans
  [from the tax increment fund of the zone in an aggregate amount not
  to exceed the amount of the tax increment produced by the
  municipality and paid into the tax increment fund for the zone] for
  activities that benefit the zone and stimulate business and
  commercial activity in the zone.  For purposes of this subsection,
  on approval of the municipality or county, the board of directors of
  the zone has all the powers of a municipality under Chapter 380,
  Local Government Code. The approval required by this subsection
  may be granted in an ordinance, in the case of a zone designated by a
  municipality, or in an order, in the case of a zone designated by a
  county, approving a project plan or reinvestment zone financing
  plan or approving an amendment to a project plan or reinvestment
  zone financing plan.
         SECTION 2.11.  Section 311.01005, Tax Code, is amended by
  adding Subsection (f) to read as follows:
         (f)  This section does not limit the power of the board of
  directors of a reinvestment zone or the governing body of the
  municipality that designates a reinvestment zone to dedicate,
  pledge, or otherwise provide for the use of revenue in the tax
  increment fund for the zone to finance the costs of a project
  involving real property located outside the zone.
         SECTION 2.12.  Section 311.011, Tax Code, is amended by
  amending Subsections (a), (b), (c), (d), and (g) and adding
  Subsection (h) to read as follows:
         (a)  The board of directors of a reinvestment zone shall
  prepare and adopt a project plan and a reinvestment zone financing
  plan for the zone and submit the plans to the governing body of the
  municipality or county that designated [created] the zone.  [The
  plans must be as consistent as possible with the preliminary plans
  developed for the zone before the creation of the board.]
         (b)  The project plan must include:
               (1)  a description of [map showing] existing uses and
  conditions of real property in the zone and [a map showing] proposed
  [improvements to and proposed] uses of that property;
               (2)  proposed changes of zoning ordinances, [the master
  plan of the municipality,] building codes, other municipal
  ordinances, and subdivision rules and regulations, if any, of the
  county, if applicable; and
               (3)  [a list of estimated nonproject costs; and
               [(4)]  a statement of a method of relocating persons to
  be displaced, if any, as a result of implementing the plan.
         (c)  The reinvestment zone financing plan must include:
               (1)  a detailed list describing the estimated project
  costs of the zone, including administrative expenses;
               (2)  a statement listing the proposed kind, number, and
  location of all [proposed] public works or public improvements to
  be financed by [in] the zone;
               (3)  a finding that the plan is economically feasible
  [an economic feasibility study];
               (4)  the estimated amount of bonded indebtedness to be
  incurred;
               (5)  the estimated time when related costs or monetary
  obligations are to be incurred;
               (6)  a description of the methods of financing all
  estimated project costs and the expected sources of revenue to
  finance or pay project costs, including the percentage of tax
  increment to be derived from the property taxes of each taxing unit
  anticipated to contribute tax increment to the zone that levies
  taxes on real property in the zone;
               (7)  the current total appraised value of taxable real
  property in the zone;
               (8)  the estimated captured appraised value of the zone
  during each year of its existence; and
               (9)  the duration of the zone.
         (d)  The governing body of the municipality or county that
  designated [created] the zone must approve a project plan or
  reinvestment zone financing plan after its adoption by the
  board.  The approval must be by ordinance, in the case of a
  municipality, or by order, in the case of a county, that finds that
  the plan is feasible [and conforms to the master plan, if any, of
  the municipality or to subdivision rules and regulations, if any,
  of the county].
         (g)  A [An amendment to the project plan or the reinvestment
  zone financing plan for a zone does not apply to a] school district
  that participates in a [the] zone is not required to increase the
  percentage or amount of the tax increment to be contributed by the
  school district because of an amendment to the project plan or
  reinvestment zone financing plan for the zone unless the governing
  body of the school district by official action approves the
  amendment[, if the amendment:
               [(1)     has the effect of directly or indirectly
  increasing the percentage or amount of the tax increment to be
  contributed by the school district; or
               [(2)     requires or authorizes the municipality or county
  creating the zone to issue additional tax increment bonds or
  notes].
         (h)  Unless specifically provided otherwise in the plan, all
  amounts contained in the project plan or reinvestment zone
  financing plan, including amounts of expenditures relating to
  project costs and amounts relating to participation by taxing
  units, are considered estimates and do not act as a limitation on
  the described items.
         SECTION 2.13.  Sections 311.012(a) and (c), Tax Code, are
  amended to read as follows:
         (a)  The amount of a taxing unit's tax increment for a year is
  the amount of property taxes levied and assessed by the unit for
  that year on the captured appraised value of real property taxable
  by the unit and located in a reinvestment zone or the amount of
  property taxes levied and collected by the unit for that year on the
  captured appraised value of real property taxable by the unit and
  located in a reinvestment zone. The governing body of a taxing unit
  shall determine which of the methods specified by this subsection
  is used to calculate the amount of the unit's tax increment.
         (c)  The tax increment base of a taxing unit is the total
  taxable [appraised] value of all real property taxable by the unit
  and located in a reinvestment zone for the year in which the zone
  was designated under this chapter. If the boundaries of a zone are
  enlarged, the tax increment base is increased by the taxable value
  of the real property added to the zone for the year in which the
  property was added. If the boundaries of a zone are reduced, the
  tax increment base is reduced by the taxable value of the real
  property removed from the zone for the year in which the property
  was originally included in the zone's boundaries. If the
  municipality that designates a zone does not levy an ad valorem tax
  in the year in which the zone is designated, the tax increment base
  is determined by the appraisal district in which the zone is located
  using assumptions regarding exemptions and other relevant
  information provided to the appraisal district by the municipality.
         SECTION 2.14.  Sections 311.013(f), (g), (l), and (n), Tax
  Code, are amended to read as follows:
         (f)  A taxing unit is not required to pay into the tax
  increment fund any of its tax increment produced from property
  located in a reinvestment zone designated under Section 311.005(a)
  or in an area added to a reinvestment zone under Section 311.007
  unless the taxing unit enters into an agreement to do so with the
  governing body of the municipality or county that designated
  [created] the zone.  A taxing unit may enter into an agreement under
  this subsection at any time before or after the zone is designated
  [created] or enlarged.  The agreement may include conditions for
  payment of that tax increment into the fund and must specify the
  portion of the tax increment to be paid into the fund and the years
  for which that tax increment is to be paid into the fund.  In
  addition to any other terms to which the parties may agree, the
  agreement may specify the projects to which a participating taxing
  unit's tax increment will be dedicated and that the taxing unit's
  participation may be computed with respect to a base year later than
  the original base year of the zone. The agreement and the
  conditions in the agreement are binding on the taxing unit, the
  municipality or county, and the board of directors of the zone.
         (g)  Subject to the provisions of Section 311.0125, in lieu
  of permitting a portion of its tax increment to be paid into the tax
  increment fund, and notwithstanding the provisions of Section
  312.203, a taxing unit, including [other than] a municipality
  [city], may elect to offer the owners of taxable real property in a
  reinvestment zone designated [created] under this chapter an
  exemption from taxation of all or part of the value of the property.
  To be effective, an [Any] agreement under this subsection to exempt
  real property [concerning an exemption] from ad valorem taxes must
  be approved by:
               (1)  the board of directors of the reinvestment zone;
  and
               (2)  the governing body of each taxing unit that
  imposes taxes on real property in the reinvestment zone and
  deposits or agrees to deposit any of its tax increment into the tax
  increment fund for the zone [shall be executed in the manner and
  subject to the limitations of Chapter 312; provided, however, the
  property covered by the agreement need not be in a zone created
  pursuant to Chapter 312. A taxing unit may not offer a tax
  abatement agreement to property owners in the zone after it has
  entered into an agreement that its tax increments would be paid into
  the tax increment fund pursuant to Subsection (f)].
         (l)  The governing body of a municipality or county that
  designates an area as a reinvestment zone may determine, in the
  designating ordinance or order adopted under Section 311.003 or in
  the ordinance or order adopted under Section 311.011 approving the
  reinvestment zone financing plan for the zone, the portion of the
  tax increment produced by the municipality or county that the
  municipality or county is required to pay into the tax increment
  fund for the zone.  If a municipality or county does not determine
  the portion of the tax increment produced by the municipality or
  county that the municipality or county is required to pay into the
  tax increment fund for a reinvestment zone, the municipality or
  county is required to pay into the fund for the zone the entire tax
  increment produced by the municipality or county, except as
  provided by Subsection (b)(1).
         (n)  This subsection applies only to a school district whose
  taxable value computed under Section 403.302(d), Government Code,
  is reduced in accordance with Subdivision (4) [(5)] of that
  subsection.  In addition to the amount otherwise required to be paid
  into the tax increment fund, the district shall pay into the fund an
  amount equal to the amount by which the amount of taxes the district
  would have been required to pay into the fund in the current year if
  the district levied taxes at the rate the district levied in 2005
  exceeds the amount the district is otherwise required to pay into
  the fund in the year of the reduction[, not to exceed the amount the
  school district realizes from the reduction in the school
  district's taxable value under Section 403.302(d)(5), Government
  Code].
         SECTION 2.15.  Section 311.014(b), Tax Code, is amended to
  read as follows:
         (b)  Tax increment and other funds deposited in the tax
  increment fund of the zone shall be administered by the governing
  body of the municipality or county that designated the zone or, if
  delegated by the governing body, by the board of directors of the
  zone, to implement the project plan and reinvestment zone financing
  plan for the zone during the term of the zone, as it may be extended,
  and for any period in which the zone remains in existence for
  collection and disbursement pursuant to Section 311.017(d). Money
  may be disbursed from the fund only to satisfy claims of holders of
  tax increment bonds or notes issued for the zone, to pay project
  costs for the zone, to make payments pursuant to an agreement made
  under Section 311.010(b) or a program under Section 311.010(h)
  dedicating revenue from the tax increment fund, or to repay other
  obligations incurred for the zone.
         SECTION 2.16.  Sections 311.015(a) and (l), Tax Code, are
  amended to read as follows:
         (a)  A municipality or county designating [creating] a
  reinvestment zone may issue tax increment bonds or notes, the
  proceeds of which may be used to make payments pursuant to
  agreements made under Section 311.010(b), to make payments pursuant
  to programs under Section 311.010(h), to pay project costs for the
  reinvestment zone on behalf of which the bonds or notes were issued,
  or to satisfy claims of holders of the bonds or notes. The
  municipality or county may issue refunding bonds or notes for the
  payment or retirement of tax increment bonds or notes previously
  issued by it. In lieu of issuing bonds or notes under this
  subsection, a municipality may issue certificates of obligation
  under Subchapter C, Chapter 271, Local Government Code, to pay the
  project costs for a zone and may use tax increment from the zone to
  pay debt service on the certificates.
         (l)  A tax increment bond or note must mature on or before the
  date by which the final payments of tax increment into the tax
  increment fund are due [within 20 years of the date of issue].
         SECTION 2.17.  Section 311.016(a), Tax Code, is amended to
  read as follows:
         (a)  On or before the 150th [90th] day following the end of
  the fiscal year of the municipality or county, the governing body of
  a municipality or county shall submit to the chief executive
  officer of each taxing unit that levies property taxes on real
  property in a reinvestment zone designated [created] by the
  municipality or county a report on the status of the zone.  The
  report must include:
               (1)  the amount and source of revenue in the tax
  increment fund established for the zone;
               (2)  the amount and purpose of expenditures from the
  fund;
               (3)  the amount of principal and interest due on
  outstanding bonded indebtedness;
               (4)  the tax increment base and current captured
  appraised value retained by the zone; and
               (5)  the captured appraised value shared by the
  municipality or county and other taxing units, the total amount of
  tax increments received, and any additional information necessary
  to demonstrate compliance with the tax increment financing plan
  adopted by the governing body of the municipality or county.
         SECTION 2.18.  Section 311.016(b), Tax Code, as amended by
  Chapters 977 (H.B. 1820) and 1094 (H.B. 2120), Acts of the 79th
  Legislature, Regular Session, 2005, is reenacted to read as
  follows:
         (b)  The municipality or county shall send a copy of a report
  made under this section to:
               (1)  the attorney general; and
               (2)  the comptroller.
         SECTION 2.19.  Section 311.017, Tax Code, is amended by
  amending Subsection (a) and adding Subsections (a-1), (c), (d), and
  (e) to read as follows:
         (a)  A reinvestment zone terminates on the earlier of:
               (1)  the termination date designated in the ordinance
  or order, as applicable, designating [creating] the zone or an
  earlier or later termination date designated by an ordinance or
  order adopted under Section 311.007(b) [subsequent to the ordinance
  or order creating the zone]; or
               (2)  the date on which all project costs, tax increment
  bonds and interest on those bonds, and other obligations have been
  paid in full.
         (a-1)  Notwithstanding the designation of a later
  termination date under Section 311.007(b), a taxing unit that taxes
  real property located in the zone, other than the municipality or
  county that designated the zone, is not required to pay any of its
  tax increment into the tax increment fund for the zone for any tax
  year after the termination date designated in the ordinance or
  order designating the zone unless the governing body of the taxing
  unit enters into an agreement to do so with the governing body of
  the municipality or county that designated the zone.
         (c)  A zone designated under other law as described by
  Section 311.0031 terminates for purposes of this chapter on the
  date specified in the ordinance or order designating the zone as a
  reinvestment zone under this chapter, regardless of whether the
  zone has terminated under the other law under which the zone was
  originally designated.
         (d)  Subject to Subsection (a-1), if tax increment bonds or
  other obligations issued or incurred for the zone are outstanding
  when the zone terminates, the zone remains in existence solely for
  the purpose of collecting and disbursing tax increment with respect
  to tax years during the designated term of the zone, as it may have
  been extended. Those funds shall be used to pay the tax increment
  bonds or other obligations issued or incurred for the zone.
  Notwithstanding the other provisions of this subsection or the
  extension of the term of a zone under Section 311.007, the
  termination date of a zone for purposes of any contract entered into
  by the board, or by the municipality or county that designated the
  zone, remains the termination date designated by ordinance or order
  in effect on the date the contract was executed unless a subsequent
  amendment to the contract expressly provides otherwise.
         (e)  After termination of the zone, the governing body of the
  municipality or county that designated the zone may continue the
  zone for an additional period for the purpose of continuing the
  implementation of the reinvestment zone project plan and financing
  plan. In that event, although tax increment shall cease to be
  deposited with respect to tax years following termination of the
  zone, the zone shall retain all remaining funds, property, and
  assets of the zone to be used to implement the plans as authorized
  by the governing body.
         SECTION 2.20.  Chapter 311, Tax Code, is amended by adding
  Section 311.021 to read as follows:
         Sec. 311.021.  ACT OR PROCEEDING PRESUMED VALID. (a) A
  governmental act or proceeding of a municipality or county, the
  board of directors of a reinvestment zone, or an entity acting under
  Section 311.010(f) relating to the designation, operation, or
  administration of a reinvestment zone or the implementation of a
  project plan or reinvestment zone financing plan under this chapter
  is conclusively presumed, as of the date it occurred, valid and to
  have occurred in accordance with all applicable statutes and rules
  if:
               (1)  the second anniversary of the effective date of
  the act or proceeding has expired; and
               (2)  a lawsuit to annul or invalidate the act or
  proceeding has not been filed on or before the later of that second
  anniversary or August 1, 2009.
         (b)  This section does not apply to:
               (1)  an act or proceeding that was void at the time it
  occurred;
               (2)  an act or proceeding that, under a statute of this
  state or the United States, was a misdemeanor or felony at the time
  the act or proceeding occurred;
               (3)  a rule that, at the time it was passed, was
  preempted by a statute of this state or the United States, including
  Section 1.06 or 109.57, Alcoholic Beverage Code; or
               (4)  a matter that on the effective date of the Act
  enacting this section:
                     (A)  is involved in litigation if the litigation
  ultimately results in the matter being held invalid by a final
  judgment of a court; or
                     (B)  has been held invalid by a final judgment of a
  court.
         SECTION 2.21.  Section 42.2516(b), Education Code, is
  amended to read as follows:
         (b)  Subject to Subsections (b-1), (b-2), (f-1), (g), and
  (h), but notwithstanding any other provision of this title, a
  school district is entitled to state revenue necessary to provide
  the district with the sum of:
               (1)  the amount of state revenue necessary to maintain
  state and local revenue per student in weighted average daily
  attendance in the amount equal to the greater of:
                     (A)  the amount of state and local revenue per
  student in weighted average daily attendance for the maintenance
  and operations of the district available to the district for the
  2005-2006 school year;
                     (B)  the amount of state and local revenue per
  student in weighted average daily attendance for the maintenance
  and operations of the district to which the district would have been
  entitled for the 2006-2007 school year under this chapter, as it
  existed on January 1, 2006, or, if the district would have been
  subject to Chapter 41, as that chapter existed on January 1, 2006,
  the amount to which the district would have been entitled under that
  chapter, based on the funding elements in effect for the 2005-2006
  school year, if the district imposed a maintenance and operations
  tax at the rate adopted by the district for the 2005 tax year; or
                     (C)  the amount of state and local revenue per
  student in weighted average daily attendance for the maintenance
  and operations of the district to which the district would have been
  entitled for the 2006-2007 school year under this chapter, as it
  existed on January 1, 2006, or, if the district would have been
  subject to Chapter 41, as that chapter existed on January 1, 2006,
  the amount to which the district would have been entitled under that
  chapter, based on the funding elements in effect for the 2005-2006
  school year, if the district imposed a maintenance and operations
  tax at the rate equal to the rate described by Section 26.08(i) or
  (k)(1), Tax Code, as applicable, for the 2006 tax year;
               (2)  an amount equal to the product of $2,500
  multiplied by the number of classroom teachers, full-time
  librarians, full-time counselors certified under Subchapter B,
  Chapter 21, and full-time school nurses employed by the district
  and entitled to a minimum salary under Section 21.402; [and]
               (3)  an amount equal to the product of $275 multiplied
  by the number of students in average daily attendance in grades nine
  through 12 in the district; and
               (4)  an amount equal to the amount the district is
  required to pay into the tax increment fund for a reinvestment zone
  under Section 311.013(n), Tax Code, in the current tax year.
         SECTION 2.22.  Section 42.253, Education Code, is amended by
  adding Subsection (c-1) to read as follows:
         (c-1)  The amounts to be paid under Section 42.2516(b)(4)
  shall be paid at the same time as other state revenue is paid to the
  district. Payments shall be based on amounts paid under Section
  42.2516(b)(4) for the preceding year. Any deficiency shall be paid
  to the district at the same time the final amount to be paid to the
  district is determined, and any overpayment shall be deducted from
  the payments the district would otherwise receive in the following
  year.
         SECTION 2.23.  Sections 403.302(d) and (i), Government Code,
  are amended to read as follows:
         (d)  For the purposes of this section, "taxable value" means
  the market value of all taxable property less:
               (1)  the total dollar amount of any residence homestead
  exemptions lawfully granted under Section 11.13(b) or (c), Tax
  Code, in the year that is the subject of the study for each school
  district;
               (2)  one-half of the total dollar amount of any
  residence homestead exemptions granted under Section 11.13(n), Tax
  Code, in the year that is the subject of the study for each school
  district;
               (3)  the total dollar amount of any exemptions granted
  before May 31, 1993, within a reinvestment zone under agreements
  authorized by Chapter 312, Tax Code;
               (4)  subject to Subsection (e), the total dollar amount
  of any captured appraised value of property that:
                     (A)  is within a reinvestment zone designated 
  [created] on or before May 31, 1999, or is proposed to be included
  within the boundaries of a reinvestment zone as the boundaries of
  the zone and the proposed portion of tax increment paid into the tax
  increment fund by a school district are described in a written
  notification provided by the municipality or the board of directors
  of the zone to the governing bodies of the other taxing units in the
  manner provided by Section 311.003(e), Tax Code, before May 31,
  1999, and within the boundaries of the zone as those boundaries
  existed on September 1, 1999, including subsequent improvements to
  the property regardless of when made;
                     (B)  generates taxes paid into a tax increment
  fund created under Chapter 311, Tax Code, under a reinvestment zone
  financing plan approved under Section 311.011(d), Tax Code, on or
  before September 1, 1999; and
                     (C)  is eligible for tax increment financing under
  Chapter 311, Tax Code;
               (5)  [for a school district for which a deduction from
  taxable value is made under Subdivision (4), an amount equal to the
  taxable value required to generate revenue when taxed at the school
  district's current tax rate in an amount that, when added to the
  taxes of the district paid into a tax increment fund as described by
  Subdivision (4)(B), is equal to the total amount of taxes the
  district would have paid into the tax increment fund if the district
  levied taxes at the rate the district levied in 2005;]
               [(6)]  the total dollar amount of any captured
  appraised value of property that:
                     (A)  is within a reinvestment zone:
                           (i)  designated [created] on or before
  December 31, 2008, by a municipality with a population of less than
  18,000; and
                           (ii)  the project plan for which includes
  the alteration, remodeling, repair, or reconstruction of a
  structure that is included on the National Register of Historic
  Places and requires that a portion of the tax increment of the zone
  be used for the improvement or construction of related facilities
  or for affordable housing;
                     (B)  generates school district taxes that are paid
  into a tax increment fund created under Chapter 311, Tax Code; and
                     (C)  is eligible for tax increment financing under
  Chapter 311, Tax Code;
               (6) [(7)]  the total dollar amount of any exemptions
  granted under Section 11.251 or 11.253, Tax Code;
               (7) [(8)]  the difference between the comptroller's
  estimate of the market value and the productivity value of land that
  qualifies for appraisal on the basis of its productive capacity,
  except that the productivity value estimated by the comptroller may
  not exceed the fair market value of the land;
               (8) [(9)]  the portion of the appraised value of
  residence homesteads of individuals who receive a tax limitation
  under Section 11.26, Tax Code, on which school district taxes are
  not imposed in the year that is the subject of the study, calculated
  as if the residence homesteads were appraised at the full value
  required by law;
               (9) [(10)]  a portion of the market value of property
  not otherwise fully taxable by the district at market value because
  of:
                     (A)  action required by statute or the
  constitution of this state that, if the tax rate adopted by the
  district is applied to it, produces an amount equal to the
  difference between the tax that the district would have imposed on
  the property if the property were fully taxable at market value and
  the tax that the district is actually authorized to impose on the
  property, if this subsection does not otherwise require that
  portion to be deducted; or
                     (B)  action taken by the district under Subchapter
  B or C, Chapter 313, Tax Code;
               (10) [(11)]  the market value of all tangible personal
  property, other than manufactured homes, owned by a family or
  individual and not held or used for the production of income;
               (11) [(12)]  the appraised value of property the
  collection of delinquent taxes on which is deferred under Section
  33.06, Tax Code;
               (12) [(13)]  the portion of the appraised value of
  property the collection of delinquent taxes on which is deferred
  under Section 33.065, Tax Code; and
               (13) [(14)]  the amount by which the market value of a
  residence homestead to which Section 23.23, Tax Code, applies
  exceeds the appraised value of that property as calculated under
  that section.
         (i)  If the comptroller determines in the annual study that
  the market value of property in a school district as determined by
  the appraisal district that appraises property for the school
  district, less the total of the amounts and values listed in
  Subsection (d) as determined by that appraisal district, is valid,
  the comptroller, in determining the taxable value of property in
  the school district under Subsection (d), shall for purposes of
  Subsection (d)(13) [(d)(14)] subtract from the market value as
  determined by the appraisal district of residence homesteads to
  which Section 23.23, Tax Code, applies the amount by which that
  amount exceeds the appraised value of those properties as
  calculated by the appraisal district under Section 23.23, Tax Code.  
  If the comptroller determines in the annual study that the market
  value of property in a school district as determined by the
  appraisal district that appraises property for the school district,
  less the total of the amounts and values listed in Subsection (d) as
  determined by that appraisal district, is not valid, the
  comptroller, in determining the taxable value of property in the
  school district under Subsection (d), shall for purposes of
  Subsection (d)(13) [(d)(14)] subtract from the market value as
  estimated by the comptroller of residence homesteads to which
  Section 23.23, Tax Code, applies the amount by which that amount
  exceeds the appraised value of those properties as calculated by
  the appraisal district under Section 23.23, Tax Code.
         SECTION 2.24.  Section 373A.151(b), Local Government Code,
  is amended to read as follows:
         (b)  In addition to other provisions of this subchapter that
  modify or supersede the application of Chapter 311, Tax Code, to a
  zone established under this subchapter, Section [Sections] 311.005
  [and 311.006], Tax Code, does [do] not apply to a zone established
  under this subchapter.
         SECTION 2.25.  Sections 311.003(e), (f), and (g), 311.006,
  and 311.013(d) and (e), Tax Code, are repealed.
         SECTION 2.26.  (a)  The legislature validates and confirms
  all governmental acts and proceedings of a municipality or county,
  the board of directors of a reinvestment zone, or an entity acting
  under Section 311.010(f), Tax Code, that were taken before the
  effective date of this article and relate to or are associated with
  the designation, operation, or administration of a reinvestment
  zone or the implementation of a project plan or reinvestment zone
  financing plan under Chapter 311, Tax Code, including the extension
  of the term of a reinvestment zone, as of the dates on which they
  occurred. The acts and proceedings may not be held invalid because
  they were not in accordance with Chapter 311, Tax Code, or other
  law.
         (b)  Subsection (a) of this section does not apply to any
  matter that on the 30th day after the effective date of this
  article:
               (1)  is involved in litigation if the litigation
  ultimately results in the matter being held invalid by a final
  judgment of a court; or
               (2)  has been held invalid by a final judgment of a
  court.
         SECTION 2.27.  (a)  Section 311.002(1), Tax Code, as amended
  by this Act, applies to all costs described by that subdivision
  regardless of when they were incurred.
         (b)  Section 311.0091, Tax Code, as amended by this Act,
  applies only to an individual appointed by a conservation and
  reclamation district to the board of directors of a reinvestment
  zone on or after the effective date of this article. An individual
  appointed by a conservation and reclamation district to the board
  of a reinvestment zone before the effective date of this article is
  governed by Section 311.0091, Tax Code, as that section existed
  immediately before the effective date of this article, and the
  former law is continued in effect for that purpose.
         (c)  Section 311.012(c), Tax Code, as amended by this Act,
  applies only to the determination of the tax increment base of a
  taxing unit for a tax year beginning on or after the effective date
  of this article, except that if the tax increment base of a taxing
  unit for a tax year beginning before the effective date was
  determined in the manner provided by Section 311.012(c), Tax Code,
  as amended by this Act, the determination is validated as if the
  amendment were in accordance with Section 311.012(c), Tax Code, as
  that section existed immediately before the effective date of this
  article.
         SECTION 2.28.  Section 42.2516, Education Code, as amended
  by this Act, applies as if Subsection (b)(4) of that section were in
  effect in the state fiscal year beginning September 1, 2006, and any
  amounts due a school district under Subsection (b)(4) of that
  section for the state fiscal years beginning September 1, 2006,
  September 1, 2007, and September 1, 2008, shall be paid to the
  district in the state fiscal year beginning September 1, 2009, at
  the time payments are made to the district under Section 42.259(f),
  Education Code.
         SECTION 2.29.  This article takes effect immediately if this
  Act receives a vote of two-thirds of all the members elected to each
  house, as provided by Section 39, Article III, Texas Constitution.  
  If this Act does not receive the vote necessary for immediate
  effect, this article takes effect September 1, 2009.
  ARTICLE 3.  EFFECTIVE DATE
         SECTION 3.01.  Except as otherwise provided by this Act,
  this Act takes effect September 1, 2009.